Legal Rights of Stockholders
Corporations raise money for their business activities through selling stock or ownership interests. Investors buy stock to share in corporate profits and limit personal responsibility for the company’s obligations and debuts. Stockholders as a separate group are a relatively new development in business. The objective of holding stock, for these people, was ownership and control. Stockholders as a separate group are a relatively new development in business.
A stockholder has some rights and these rights specified by law that is given below:
- Stockholders can influence corporate policy through the voting mechanism. This includes electing directors and proposals for fundamental changes affecting the company such as mergers or liquidation.
- If necessary by challenging actions of corporate officers in the courts.
- Right to share in the profits of the enterprise if dividends are declared by directors.
- Right to receive annual reports of earning and activities of a company.
- Ownership in a Portion of the Company.
- Right to inspect the corporate books.
- Right to elect a director and other officers.
- Right to bring other proposals before the stockholders.
- Right to dispose of ownership certificates.
- The Right to Transfer Ownership. The right to transfer ownership might seem mundane, but the liquidity provided by stock exchanges is extremely important.
- Opportunity to Inspect Corporate Books and Records. This opportunity is provided through a company’s public filings, including its annual report.
